Scarcity of materials and high prices will remain key features of the European stainless steel market in the final months of 2021. The pandemic-induced supply / demand imbalance continues to disrupt global supply chains.
Manufacturing companies around the world are still struggling with shortages of materials and components. The most publicized effect is the reduction in vehicle production, resulting from the semiconductor shortage. However, this is just one of the many bottlenecks.
In Europe, the availability of stainless steel from domestic producers remains limited. Steelmakers have not been able to supply sufficient tonnages to service centers and distributors since demand recovered rapidly at the end of 2020. This was initially most noticeable in product categories flat, due to the strong rebound in automotive and white requirements. goods industries.
Delivery times vary by plant, but are generally between January and April of next year for 300 Series stainless steel coils. This is a far cry from the four week shipping dates that many buyers were expecting. regulars, before Covid. The delivery times offered by regional bar rolling mills are even longer, extending until May / June 2022.
Mixed adoption for Q4 quotas
EC safeguard measures have regulated the volume of overseas material arriving in the EU since 2018. Despite growing opposition to quotas and low supply chain stocks across Europe, guarantees have been extended by three years, to cover the period of July 1. , 2021 until June 30, 2024. As a result, factories in many countries remain reluctant to ship to European customers. Local buyers of stainless steel are therefore offered little respite from the domestic deficit.
During the first days of the October / December period, the full duty-free quotas, for several product categories specific to each country, were cleared through customs at European ports. These included cold rolled stainless steel flat products from Taiwan and Turkey, as well as lightweight stainless steel bars and profiles made in India.
Conversely, volumes from several other nations for these products should not be fully used, at the current rate, before the end of December. Factories in a number of these countries – including those in China, South Korea, Malaysia and Indonesia – should prioritize sales to their local markets over exports.
Much of Taiwanese and Turkish cold-rolled flat products, as well as lightweight stainless steel bars and profiles of Indian origin, had arrived weeks, if not months, earlier. This material was stored on the docks, pending the renewal of the quota, to avoid the tariff.
Several buyers have suggested that the tonnages awaiting customs clearance exceeded the customs exemptions in early October. It is therefore likely that the quotas for the first quarter for these categories will be exhausted quickly in early 2022.
Factories remain bullish on prices
The current volume of imports is of little concern to domestic stainless steel producers. The recent fire at the Marcegaglia plant risks further tightening the supply of cold-rolled coils, especially in southern Europe, in the short term.
Buyers confirm that local factories remain optimistic in their price aspirations. They would, it seems, be reluctant to reduce sales values â€‹â€‹because they have extensive order books. In addition, rising energy and raw material costs are expected to put further upward pressure on stainless steel transaction values, in the last two months of 2021.
However, a sustained slowdown in purchasing activity can cause an increasing number of customers to begin to resist further price increases, during this period.